Bank of Japan Governor Kazuo Ueda signaled the likelihood of further interest rate hikes next year, expressing growing confidence that the central bank is nearing its sustainable 2% price stability target. In a speech Thursday at a conference hosted by business lobby Keidanren, Ueda noted that the goal, accompanied by wage increases, is steadily approaching. His remarks underscore investor expectations that the bank will continue hikes even after raising borrowing costs to the highest level since 1995 last Friday.
Bank of Japan Governor Kazuo Ueda, in what are likely his final public remarks of the year, addressed a conference hosted by the business lobby Keidanren on Thursday. He projected increasing confidence that the central bank is approaching its 2% price stability target, supported by wage growth. "The achievement of the 2% price stability target, accompanied by wage increases, is steadily approaching," Ueda said. He further noted, "Amid tightening labor market conditions, business behavior has shifted significantly on setting wages and prices in recent years."
These comments highlight investor expectations that the Bank of Japan is not finished with rate adjustments, following its hike last Friday to the highest borrowing costs since 1995. Traders are scanning for signals on the timing of the next increase, and Ueda's tone appeared slightly more hawkish than in his press conference after last week's policy decision. The speech underscores evolving dynamics in Japan's economy, where a tight labor market is driving changes in wage and price strategies, fostering sustainable inflation expectations.
